A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

May 20, 2008

The damage that Bernanke has inflicted upon the United States won't be seen until a few years down the road. Similar to Greenspan, who was treated as a god when he retired, only to be seen as a corrupt and incompetent goat now.

Volcker did what had to be done when it had to be done, and it was hard (but necessary). Bernanke on the other hand did what was easy. And you'll see down the line what that causes.

21 comments:

“I believe that if the Fed under Alan Greenspan had issued the regulations that are now being promulgated, we would have had much less of a crisis,” Frank (D-Newton) told a Suffolk University Law School forum yesterday.

“Greenspan felt very strongly that specific interventions in the economy would always fail,” said Frank, who’s leading the mortgage market’s cleanup as head of the House Financial Services Committee. “To Greenspan, you had two choices - (raise) interest rates drastically and take down the whole economy in the process, or let (market excesses) go on.”

Barney Frank's comment reminds one of the old saying about how governments conduct its business: when in a hole, dig deeper!

Of course specific interventions in the economy alwsy fail; just look at what happened to the government programs that encouraged banks to lend to people who would not qualify for loans in normal market conditions. All the incentives "to help the lower middle class" backfired terribly. Now it's tax and inflation at the expense of the poor, lower-middle and retirees to bail out the banks.

Bitterrender, run-away inflation of the 70's had its roots in the Johnson administrations' "War on Poverty" and Nixon's "we are all Keynsians now" policy to delink the dollar from gold. Run-away inflation is the inevitable result of Keynsian economics. Carter was just unlucky and ineffectual, but he at least did two things right: (1) did not declare a war on Iran; instead, Carter cut losses after the desert rescue debacle; the self-righteous socialist "liberals" at that time had not yet turned into the chicken hawks that occupy today's administration, thank goodness; (2) picked Volker for the FED job.

inflation is finally taking the stock market down too -- even with all the BS numbers taking out the stuff that's rising fast. with the average american in debt, what's to put in the market? 401ks will probably get drained. why would foreigners want to invest here? SOX already pushed IPOs to London.

time to raise rates. in a credit crunch, credit should be expensive, not cheap. enough market fixing. it isn't working.

"Sen. Barack Obama, D-Ill., called on Bush to "abandon his veto threats and commit his administration to working with Congress" to enact the measure quickly. "American families need urgent relief, and these are important steps to help innocent homeowners, without rewarding irresponsible lenders," the Democratic presidential candidate said in a statement.

The idea of an FHA-based foreclosure prevention bill has drawn staunch opposition from most Republicans, many of whom say they are concerned that taxpayers would be on the hook for huge losses if homeowners defaulted on their new loans."-AP